In a move almost certainly motivated by tax considerations, Pfizer has decided to turn itself into a British corporation, by purchasing AstraZeneca.

In doing so, Pfizer will get its hands on billions in offshore profits and escape U.S. taxes. These offshore profits are due, in part, to subsidies from U.S. taxpayers, such as research and development incentives, as well as trademark and patent protections.

Americans don't want to see a quintessentially U.S. company decamp abroad, taking its tax dollars with it. There is, however, strong disagreement regarding what to do about such corporate "inversions."

Those on the right see the Pfizer transaction as proof that corporate tax rates are too high. If we'd just lower our corporate tax rate, this logic goes, companies would have no incentive to move offshore.

However, the United States couldn't possibly win the ensuing race to the bottom. There will always be tax systems more lax than ours. Taking this argument to its logical conclusion suggests that not only should we reduce the corporate tax rate, we also should subsidize corporations with negative rates to stay in the USA.

A much more straightforward way to prevent corporations from "inverting" is simply to make it illegal. President Bush signed an "anti-inversion" law in 2004, and President Obama has proposed making existing rules stronger.

The U.S. corporate tax system gives corporations an incentive to generate and keep profits offshore. U.S. taxes are deferred on profits earned abroad until the money is brought home, and profits reinvested overseas are never taxed by the U.S.

Eliminating deferral would end the tax incentive to invest overseas. U.S. firms would make investment decisions based on economic considerations rather than taxes. With many corporations paying much less than the rate that's on the books — Pfizer paid 0.9% in 2013 — corporate taxation should be reformed. Eliminating deferral and strengthening anti-inversion rules would be a good start.

Joshua Smith and Thomas L. Hungerford work at the Economic Policy Institute, a progressive think tank, Smith as a senior policy analyst and Hungerford as director of tax and budget policy.